Iran to secure $30 billion of credit line next month
Iran will finalize financing contracts worth $30 billion within the next month, head of the Organization for Investment, Economic and Technical Assistance Mohammad Khazaei says, dismissing claims that the credit lines will leave the country in the red.
“These finances do not mean putting the country in debt, but they will give a capability to the economy, the plans and projects to benefit from the funds,” he told an Islamic banking conference in Tehran Tuesday.
The official was apparently responding to an article in the Iranian daily Kayhan which criticized pro-government media for celebrating the country’s biggest credit line deal in recent years with South Korea’s Eximbank, contending that it would only bring about financial liability for the country.
Khazaei said international financial standards must be applied in the banking system and made transparent, “because without interacting with other banks, there can be no communication or transfer of resources.”
Foreign banks have been skittish about carrying out Iran-related transactions despite a nuclear accord which lifted most sanctions on the country early last year.
While remaining US sanctions are mostly blamed for frightening away trade partners, other people say systematic problems plaguing Iran’s banking system provide the added drawback.
The Iranian government plans to attract $65 billion of foreign investment during the sixth five-year development plan (2016-21), of which $30 billion is about to come in finance, $20 billion in economic partnership and $15 billion in direct investment.
Iran secured its first credit line of $10 billion from China in 2015, while Austrian Finance Minister Hans Jörg Schelling said during a visit to Tehran that his country had allocated a credit line of €1 billion for a major steel production project in southern Iran.
And on Friday, Iranian banks signed a framework agreement with Korea Eximbank, under which the Korean side will provide an 8 billion euro ($9.4 billion) loan to finance various projects by South Korean companies in Iran.
“The 8 billion euro finance by the Koreans will break a big barrier. Those banks that were afraid of cooperating with Iran can now finance Iranian projects,” the state news agency IRNA said on Saturday.
“It is expected that after the Korean banks, Japanese banks and later European banks will be more comfortable working with Iran,” it added.
Governor of Central Bank Valiollah Seif said the loan was a sign of “return of global trust in Iran’s banking system.”
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